Walmart

With more than 11,000 stores in 27 countries, Walmart has a staggering amount of shelf space to fill, and hundreds of thousands of products to place on those shelves. Finding ways to most efficiently and attractively place those products is a high priority for the world’s largest retailer.

For the past several years, the Bentonville, Ark.-headquartered company has led the way in developing packaging that can be easily stocked directly on shelves instead of needing to be unpacked. For Walmart, this packaging – formally known as retail-ready packaging (RRP) – has historically included plain cardboard boxes with removable tops or perforated knock-out panels. This type of packaging, colloquially referred to as PDQ, for “pretty darn quick,” is rapidly changing.

“At one point, RRP was all about being able to get products on shelves as fast as possible,” says Chet Rutledge, Walmart’s director of packaging for private brands. “As things have evolved, we’re looking more for shelf appeal. All of our associates are trained to stock shelves in a nice, clean way, but when you take a box and tear a panel off, you still have ragged and frayed edges that are not very attractive.

“When associates cut the side from a case or cut the top from a case, there’s a chance they can cut too deep and damage the product,” he adds.

The ‘Five Easies’

Walmart is focusing on developing packages that are more attractive to consumers while still emphasizing what the company refers to as the “five easies” of RRP: packages that are easy to open, easy to identify, easy to shop, easy to stock and easy to dispose. Studies performed by the company during the past four years conclude that associates can stock RRP in up to 60 percent less time, Rutledge notes.

Walmart is being selective in its use of RRP in its stores. High-volume, lightweight and high-velocity grocery items are the best candidates for the packaging. “Anything that requires multiple repetitive touch stocking is a good candidate,” he adds. “We want to use more refined packages where the design and intent is to survive the supply chain while still meeting the ‘five easies.’”

In addition to produce, for which perforated boxes have been utilized for the past several years, the company is also using RRP for other food and drink items. These include drink supplements such as powdered teas, which are marketed in small pouches within a larger carrier that is placed on the shelf and opened.

Other categories in which RRP is seeing increased use include prepared dinner kits and pet treats. The company in recent years also piloted the use of RRP for confectionary items in its Canadian stores, it says.

“Most of these items are coming to us in some type of flexible packaging,” Rutledge says. “Many of these suppliers do a good job integrating graphics onto the packaging that marries up well with the individual unit packaging. It’s important that the graphics match up so the consumer doesn’t lose perception of the product.”

New Developments

Walmart’s current RRP initiatives include changing the packaging of its Great Value shredded cheese from flat pouches that hang on peg hooks to stand-up gusseted pouches. The pouches are shipped flat in the packaging. The associate turns the packaging on its side, removes its top and places it directly on the shelf. The new cheese packaging is perforated, which allows for air flow through the refrigeration case, ensuring the cheese remains cool.

“By changing the style of bag, we’ve changed their geometry, which saves space on the shelf,” he adds. “One thing that we are not growing more of is shelf space, so anything we can do to grow cube efficiency can have potential to help us get additional facing of high-volume items where needed or free up space for new, innovative products.”

The company is also pursuing RRP on cubed cheese. This would include packaging cubes in corrugated boxes with the cheese pouches interleaved so that when the case is opened it divides into two separate units that can be placed on shelves.

The shredded cheese RRP is being rolled out nationwide. Walmart is also in development on new packaging used to ship eggs. Typically, eggs are shipped 15-dozen units at a time in a corrugated box; the company is examining the use of a returnable plastic crate that can hold 24-dozen units. The front of the crate is removed before it is placed on the shelf.

“There are opportunities for us to look at or explore shelf-ready systems for any product that is high-volume and high-touch, and that can include many different things,” Rutledge says.

Strategic Alliances

Although RRP offers a number of advantages to Walmart in terms of labor and potentially cost savings, the company is working to overcome a few challenges related to their implementation. “There’s a perception people have that any change in packaging will cost more, as RRP will require different kinds of materials,” Rutledge says. “I feel that depends on what you want it to achieve and the characteristics you want it to have.”

Rutledge regularly engages with suppliers and manufacturers about RRP opportunities. “By having more of a partnership with them, I can make it easier for them to justify purchasing a new piece of equipment,” he says. “I think it’s very important to give some guidance and work with them in their capital planning process. It’s important that we develop a strategic, instead of a tactical, relationship.”

For Rutledge, this includes speaking to suppliers about replacing aging equipment with new equipment that can accommodate RRP packaging. Walmart also helps suppliers find savings within their organizations related to RRP.

By moving from larger packages to stand-up gusseted pouches, Walmart’s suppliers can realize potential savings related to weight, for instance. “RRP requires some investment, but if you take a holistic approach and look at the entire supply chain including shipping case size, we’ve been able to be cost neutral or even save on packaging getting them retail ready,” Rutledge says.

Rutledge says he sees RRP continuing to become more advanced and prevalent for Walmart as well as other retailers in the future. “We will see a natural evolution in the improvement of the packaging as well as the quality of graphics,” he says. “I look at RRP as being a full delivery system for a product, not just a shelf-ready solution.”